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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
Republic Services Inc has a M-score of -2.63 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Republic Services Inc was -0.50. The lowest was -3.04. And the median was -2.76.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Republic Services Inc for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 1.0049||+||0.528 * 0.9666||+||0.404 * 0.9909||+||0.892 * 1.0482||+||0.115 * 0.9778|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9782||+||4.679 * -0.039||-||0.327 * 0.9866|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $955 Mil.|
Revenue was 2264.1 + 2225.3 + 2073.7 + 2141.5 = $8,705 Mil.
Gross Profit was 866.8 + 852.3 + 752.5 + 857.5 = $3,329 Mil.
Total Current Assets was $1,361 Mil.
Total Assets was $19,987 Mil.
Property, Plant and Equipment(Net PPE) was $7,149 Mil.
Depreciation, Depletion and Amortization(DDA) was $983 Mil.
Selling, General & Admin. Expense(SGA) was $873 Mil.
Total Current Liabilities was $1,725 Mil.
Long-Term Debt was $7,020 Mil.
Net Income was 185.8 + 179 + 132.5 + 236.6 = $734 Mil.
Non Operating Income was -0.1 + -1 + 1 + 0.8 = $1 Mil.
Cash Flow from Operations was 379.3 + 325.9 + 396.4 + 411 = $1,513 Mil.
|Accounts Receivable was $907 Mil.
Revenue was 2165.4 + 2111.7 + 1998.6 + 2028.4 = $8,304 Mil.
Gross Profit was 847.8 + 701.7 + 775.5 + 744.9 = $3,070 Mil.
Total Current Assets was $1,290 Mil.
Total Assets was $19,826 Mil.
Property, Plant and Equipment(Net PPE) was $7,047 Mil.
Depreciation, Depletion and Amortization(DDA) was $944 Mil.
Selling, General & Admin. Expense(SGA) was $852 Mil.
Total Current Liabilities was $1,769 Mil.
Long-Term Debt was $7,024 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(955.2 / 8704.6)||/||(906.8 / 8304.1)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(852.3 / 8304.1)||/||(866.8 / 8704.6)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (1360.9 + 7149.3) / 19987)||/||(1 - (1290.4 + 7046.9) / 19826)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(944.3 / (944.3 + 7046.9))||/||(982.8 / (982.8 + 7149.3))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(873.3 / 8704.6)||/||(851.7 / 8304.1)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((7020 + 1725) / 19987)||/||((7023.6 + 1769.2) / 19826)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(733.9 - 0.7||-||1512.6)||/||19987|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Republic Services Inc has a M-score of -2.63 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Republic Services Inc Annual Data
Republic Services Inc Quarterly Data